Marketing the Coop Advantage in a Worker Coop

For many years now, we have been taking about doing this. However, in general this refers to focusing on the first three principles of the Cooperative Identity often referred to in the United States as “The User Principles.” This works because the users are the owners and the advantage of membership is a comparative advantage in the marketplace. But where is the advantage for a worker cooperative where the users of the cooperatives goods or services may not be members?

This was the topic of my first presentation at the US Federation of Worker Cooperative National Worker Cooperative Conference. It was also the topic of my Master project to earn my MMCCU. I created a model for how to create this advantage and then used the example of Union Cab of Madison Coop (my coop) and the Interfaith Program of Equal Exchange. We then opened up the discussion to see how the people in the room might develop advantages for their consumers. This goes beyond simple discounting. It also goes beyond appealing to people’s do-gooderism. It involves doing what cooperatives do: filling a void in the marketplace that our competitors either won’t or can’t fill.

In the lead up to the discussion, I presented two models. This first is called the Worker Cooperative Success Chain: Ugh. I can’t seem to find a way to post the image, so you will have to wait to see it.

This chain is based on a similar model for consumer cooperatives created by Bob Burlton. I first learned of it at the MMCCU orientation and was likely presenting it at the same time that Bob was to the current cohort. It emphasizes that the internal infrastructure of the cooperative needs support. Our principles of Education, Information and Training lead to a well trained staff. This leads to a loyal staff which creates customer value. In the consumer world, “customer value” translates to ownership culture and membership. In a worker cooperative, loyal staff translates into ownership culture and membership. Thus, the MOCA is essentially the same. Maximize the ownership culture and it creates a value-added service for the consumer which, in turn, creates a strong and sustainable cooperative.

The second model that I presented goes into more detail. It deconstructs the traditional model of “relationship marketing” in which the organization of the corporation focuses on the consumer. The worker coop model still does that; however, it shows the relationship between the stakeholder groups of the cooperative and the community. Consumers remain at the middle, but there is a tension between them and the front-line workers. This tension may be good or bad depending on the culture of the organization, the industry, and the willingness to engage. Likewise, the frontline worker/owners engage in a similar tension with their support stakeholder group (back of the house operations, management, IT, etc) although this relationship is bolstered through the governance process. Finally, the outer ring of stakeholders (vendors, the community and the government) have an equal tension with the cooperative as a whole. This model shows the complicated world that worker cooperatives navigate and why an ownership culture can make these relationships transforming.

I think is is a very pretty model, but can’t seem to find a means to post it tonight.

For Union Cab, the means of expressing the cooperative advantage involved two processes. The first was a complete redesign on the dispute resolution process. The cooperative spent over a year seeking member opinion, examining what worked, thinking about why other things didn’t work, held forums, and finally developed a new system that replacing the patronizing system used by most cab companies (go tell the Boss (Dad) that your co-worker should be punished) with a system that encourages members to hold each other accountable for the good will of the cooperative in a collegiate manner. We replaced the GM in discipline (or will after a period of education) with a Review Council. We created a means for owners to feel like owners and act like owners. That was the internal part of the dynamic. On the external front, we created a program to ally individual members with individual consumers. We are using that tension between the member stakeholder and consumer stakeholder to give the consumer an advocate and voice inside our cooperative. This helps balance the Success Chain. It further creates ownership culture. The external effort and the internal effort support each other. This creates a greater sense of community inside and provides a value-added effect that would be difficult for the competitors to duplicate.

At Equal Exchange, they engaged in an Interfaith Program. I cannot do their system justice to what my co-presenter, Aaron Dawson described. It is an incredible program that links farmers in the developing world to interfaith communities in the United States. It creates fundraising opportunities as well as making real connections.

In the final analysis, if we aren’t really different from our competitors, we are just collectivized capitalists–pirates. We form our worker coops to create good sustainable jobs, but the coop movement is more than that. We must be about creating sustainable communities. We must offer a real cooperative advantage to our consumers. We have to see our consumers as our primary ally in the marketplace. If we do, we have the opportunity to transform our community and ourselves into something quite remarkable. If we don’t we might be better off in an ESOP and will likely be relegated to the ashheap of history.

About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-op in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University. He has served on the board of the US Federation of Worker Cooperatives and the Board of Governors for the Democracy at Work Network. He currently sits on the Co-op Circle and Mission Circle for Sociocracy for All. He teaches on worker co-operatives and democratic management in the summer at The Evergreen State College.